How Much Does It Cost to Refinance a Student Loan? 14 Fees and Financial Impacts Be Aware Of

It generally doesn’t cost anything to refinance a student loan because lenders don’t charge an upfront fee. Application fees and origination fees, for example, are rare. If you encounter a lender charging this fee, you should keep shopping around.

However, you could see costs within the loan process, such as late fees and returned payment fees. It’s also important to consider the long-term interest expense when assessing the overall cost of refinancing. Here’s everything to know.

How common are student loan refinance fees?

Fees for student loan refinancing are relatively rare among lenders in 2025. In the table below, we’ve broken down the typical fees you might find when refinancing student loans, and how common they are.

This can help you choose a lender—if a lender you’re considering charges a fee that’s not very common, it means you might find a better deal elsewhere.

Here’s a closer look at each of these fees and what to know about each.

1. Application fee

• Frequency: Rare
• What it is: Charged by some lenders to process your application, whether or not it’s approved.

Of the private student loan lenders we reviewed to choose our top recommendations, we didn’t find any lenders that charged this. If you are charged this fee, you can expect it to be 1% – 6% of your refinanced amount.

2. Origination fee

• Frequency: Rare
• What it is: A percentage fee deducted when funds are disbursed.

Most lenders today don’t charge origination fees for refinance student loans, but some still do. Yrefy, for example, charges 5%. MPOWER charges 2%.

Because origination fees are rare these days, if you are considering a lender that charges one, it might be a dealbreaker—but not always. MPOWER, for example, caters to borrowers who might not otherwise qualify to refinance.

In this case, it might make sense to pay the origination fee if you’re refinancing to secure a lower rate.

3. Late fee

• Frequency: Common
• What it is: A penalty for missing your payment due date beyond the grace period.

Late payment fees are probably the most common cost you’ll see with refinance student loans. Typically, your loan terms will specify a payment grace period (this is different from the grace period after you graduated before repayment began on your loans).

This grace period specifies the amount of time you have past your payment due date to make the payment without being charged the late fee. It will vary by lender, but it may be around 15 days.

Late fees usually range from $20 – $25 per late payment, or a percentage of the amount due.

Late fees are definitely the most common fee charged among the the refinancing lenders we’ve reviewed, as you can see from the table below.

4. Returned payment fee

• Frequency: Relatively common
• What it is: Charged if your bank declines a payment due to insufficient funds.

In our research, it was less clear which lenders charge returned payment fees, and in some cases, returned payments could function as late payments. It’s wise to check your loan terms to understand this fee before applying.

This fee may also be called a “returned check” fee and could be $20 to $30 dollars per incident.

5. Prepayment penalty

• Frequency: Never
• What it is: A fee charged for paying off your loan balance early.

You should never face prepayment penalties for private student loans, as they are banned for all education loans thanks to the the Higher Education Opportunity Act (HEOA), which amended the Truth in Lending Act (TILA) in 2008. 

6. Forbearance fee

• Frequency: Rare
• What it is: A charge for entering forbearance due to financial hardship.

We couldn’t find any lenders that explicitly stated that it charged this fee for borrowers who need to enter forbearance–but that’s not to say it doesn’t exist. Some private student loan lenders have charged this in the past and it likely varies greatly by lender.

Sallie Mae is one example, which previously charged a $50 forbearance fee for each loan, but it discontinued this policy in 2012 (note: Sallie Mae doesn’t refinance student loans.)

7. Collection fee

• Frequency: Rare
• What it is: If you default on your student loans, your lender may pass on costs for collections or legal action.

Collection fees are rare simply because you must default on your student loans, and the lender must take legal action for this fee to be implemented. If you do get this far, though, you can expect to pay approximately 20% of each outstanding payment, or 25% of the total outstanding balance.

When refinancing, prioritize lenders that don’t charge fees to keep costs lower. Learn more about how refinancing student loans works to identify the best lenders for your situation.

Try to avoid origination fees, or at least calculate those into the total interest cost when deciding to refinance. I would avoid any loan that has a forbearance fee.

Jim McCarthy, CFP®

Other refinance cost considerations

Refinancing your student loans can also have broader financial impacts. Here are key factors to evaluate:

8. Total interest paid

Extending your term can lower monthly payments but often increases the total interest paid over time. Use a student loan refinance calculator to estimate the long-term cost.

9. Debt-to-income ratio

Lowering your monthly payment can affect your DTI ratio, which might influence your eligibility for other loans, like mortgages.

10. Variable rates

Variable-rate loans start with lower rates but can rise over time. Refinancing to a fixed rate eliminates this risk. Learn more about the pros and cons of fixed vs. variable-rate loans.

11. Federal student loan benefits

Refinancing federal loans removes protections like income-driven repayment plans and forgiveness programs. Read about federal loan benefits, such as student loan forgiveness, to decide if refinancing is right for you.

12. Credit score impact

A hard credit inquiry during refinancing can temporarily lower your score. This might impact your ability to secure other credit.

13. Student loan interest tax deduction

Refinancing could change the amount of interest you pay, affecting your annual deduction (up to $2,500).

14. Cosigner impact

Refinancing can allow you to release a cosigner, but if one is still required, consider the impact on their credit and liability. Learn more about the pros and cons of student loan cosigners and how refinancing could affect them.

The decision to refinance mostly depends on individual budgets, but the goal of any refinancing should be to lower the total interest paid over the life of the loan.

Jim McCarthy, CFP®

Explore your own savings potential

Every borrower’s situation is unique, and your savings will depend on your current loan details, interest rate, and chosen term length. Use our student loan refinance calculator to input your information and discover how much you could save—both month-to-month and over the life of your loan.